Many years ago a former manager of mine used to work at a company that made dump trucks. He said he thought his company was involved in a money laundering scheme with a well know trash hauling company that was rumored to have mob ties.
The trash haulers would order a bunch of $100,000+ dump trucks. Now and then they’d come out and pick one up, but for the most part the trucks just sat around the manufacturers yard. Eventually the trash hauling company would sell them to their competitors at a loss, and the manufactuerer would just drive them back into the shop and repaint them.
The manufacturer would also always buy steel from one particular company, rather than shop around.
So was the guy that’s supposed to figure out how many very expensive trucks the trash company needs smoking crack and the manufacturer too lazy to get competative bids, or was something shady going on?
If they were a public utility or had to justify their rates by showing how much capital they needed, the excess dump trucks might have been just that – excess capital expenditures to justify higher rates.
Sounds like there might be some illicit finances going on but I’m not seeing it as money laundering specifically. Money laundering is when a criminal organization takes income it earned from a criminal activity it can’t admit it’s participating in and converts it into apparent income from a legitimate source that it can openly admit to having.
Buying and selling an item is sometimes one of the steps money launderers use in order to obfuscate the source of their cash. At least that’s what they told us in our anti-money laundering course. I think the example they used was buying an expensive sports car in one country and selling it in another country.
I’ve never had reason to launder large sums of money (or even handle large sums of money) so I can’t claim personal experience in the subject.
Most of us are typical thousandaires and our financial transactions fall below the level where anyone is keeping close track of them. But when you get up in the level where millions of dollars are being moved around, it gets noticed and records are kept - and any absence of records gets noticed. You can’t one day say you have fifty million dollars without somebody wanting to know where it came from. You can tell people it’s none of their business, but they’re going to investigate. And if you got that fifty million dollars from operating a meth lab, they’re going to want to question you further and you’re no longer going to have the option of refusing to get involved.
So you need a plausible explanation of how you got that money. You could offer up something like telling them you sold your car to me and I paid you fifty million dollars for it because I really liked the color. But that’s just going to put the attention on me and if we’re partners in some criminal organization any investigation of me will eventually lead back to you.
You could come up with a more plausible explanation involving something like a real estate sale and we could just fudge the figures a little. But there’s a limit to how much fudging you can do and still keep it looking plausible. If you’re trying to hide fifty million dollars in illegal income, you’re going to need a big business with something like five hundred million in legitimate income to hide it in. And then the question is why you’re engaged in crime if you’ve got a legitimate business that large.
What you’d ideally like is a legitimate business which can plausibly handle sums of money much larger than the assets of the business without having any paper trail for those large sums of money. And surprisingly such a business does exist. But I’ve been warned in the past not to discuss it on this board so I’ll stop here.
No, not really. The point is you want your business to look plausible so there are limits to how much money you can filter into the business.
Let’s say there’s a completely legitimate business: the Genco Pura Olive Oil Company, for example. Every year it buys two million dollars of supplies, has a million dollars in overhead costs, and sells four million dollars of products, thereby making a million dollars in profits.
Across town, there’s my rival company, the Little Nemo Olive Oil Company. It’s pretty much the same size as Genco Pura but I’m using it as a front to launder money for my meth lab. So when I report I sold fifty-four million dollars of products last year, somebody’s going to take a look. Looking at other businesses around the country, investigators realize Genco Pura is a typical business and my business is wildly atypical. The investigators are going to see I bought the same amount of supplies and had the same amount of overhead that Genco Pura had but I somehow made fifty million dollars more than they did. They going to start looking more closely at me to see why this discrepancy exists and that’s when they find my meth lab.
So what I need is a legitimate business with low fixed costs but which I can use to plausibly claim pretty much any amount of income I want without worrying if it shows any connection to my costs. Businesses like that are pretty rare and there’s only one relatively common example.
I can’t see it as being money laundering. That is typically getting dirty money- say from a drug deal- and then washing it by having it come from a legitimate source. For example a race course or a casino.
So you would pay your friendly bookie $20k to turn $100k dirty money into $80k clean money and he cooks his books (I plucked those figures).
What you describe sounds more like some bounty or licensing deal. Or Tax evasion.
Back in the 1980s I was friends with a girl whose mother worked as a receptionist for a local trash hauler. She (her mother) said in a matter-of-fact way that her company was run by the mob. “And you should be thankful it is run by the mob,” she said. “If it were a legit business, your trash pick up service would cost 5X what it does now.”
No, you run into the same issues as you’d have with a second-hand goods store or most other businesses. The basic fact is that most businesses fit a profile - if you know how much money is going into the business, you can make a pretty accurate guess how much money is coming out. So it’s a red flag when you try to claim your business is making ten times as much money as other similar businesses make.
Doesn’t buying extraneous dump trucks make your trash-hauling business look bigger? You’d have to make it look like you’re using the industry-typical amount of money for insurance, maintenance, payroll etc for your ‘larger’ business. Then you can get away with more fake customers/pickups before tripping any red flags.
I image that trash-hauling expenses are mostly capital equipment and payroll. Heck, you could provide ‘legitimate employment’ as ‘drivers’ to your mob underlings to help with their money laundering problems. You wouldn’t want all your underlings doing their own amateur money laundering and getting caught; they might rat you out!
Nailbars, Takeaway food shops, and in Paris and London loads of clothing shops with not a customer in sight. They all put sales through their books that never took place.
In London a sandwich shop made a roaring trade. It was fabulous for sandwiches and gave employment to many many people. But their books were totally cooked.
Oh and i forgot to add…Russsian/Arab billionaires owning soccer clubs in the UK.